Trump: Regulations Holding Back Housing-Market Recovery

Regulations on the financial sector are preventing banks from lending to would-be homebuyers and are hampering recovery in the housing sector, according to billionaire real-estate mogul Donald Trump.

While banks may be acting too cautiously and should probably lend more, regulators need to back off the financial sector.

"The banks have not behaved very well because they haven't been loaning out money, but the regulation is so stringent and so tough that it makes it very hard to get the economy going and you can't get the economy going unless the banks are going to get going," Trump told CNBC.

Pockets of the housing sector are rebounding, especially in markets in Miami and in Manhattan, but on a national scale, the sector continues to lag. Those who can get access to financing can buy homes on very attractive terms, though the sector has room for improvement.

"The housing market continues to be terrible. People are not able to get financing to buy a house, and it's a situation that has to be taken care of," Trump said. "Whether it's overregulation or the banks are just not behaving, people are unable to get financing."

Banks will have to ease up a little and take more risks, but ultimately, regulators are going to have to ease up even more, Trump said.

"On occasion a bank is going to make a bad loan. That's the way it is," Trump noted.

"The regulators are putting such pressure on the banks and a lot of the bankers that I deal with are telling me it's so difficult nowadays doing business because every single deal is questioned and it goes through so much scrutiny and it's not free market anymore," Trump added.

"Until you get back to a society where the banks are allowed to loan money to people to buy houses — good people with good credit ratings in good property — you are not going to have much of a housing rebound."

Home prices, meanwhile, registered their first year-on-year rise in June since 2010, a widely watched index finds.

The S&P/Case-Shiller home price index for 20 cities rose 0.5 percent on year in June.

"We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change. The market may have finally turned around," said David Blitzer, index chairman for S&P Dow Jones Indices, according to the AFP newswire.